Navigating State Options for Medicaid HCBS

New incentives and flexibilities exist for states to help increase the availability of Medicaid home- and community-based services (HCBS), of which four options are included in the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) and now that the Supreme Court has upheld the law, states can really focus on expanding these services with the help of the Federal government. The Government Accountability Office (GAO) has closely examined these options in a recent report. Because available Medicaid HCBS options are so complex and the factors that affect state planning are constantly changing, ongoing federal technical assistance is of utmost importance, so that states are able to navigate various HCBS options as they seek to ensure appropriate availability of HCBS, according to the GAO.

Although it has been 13 years since the Olmstead decision held that states must serve individuals with disabilities in community-based settings under certain circumstances, GAO found that states continue to need assistance with rebalancing their long term supports and services (LTSS) systems to move toward more HCBS, while increasing opportunities for individuals who need LTSS to live more independent lives in the community. The four Medicaid HCBS options established or revised by PPACA added to the array of options states have to consider in designing their coverage of services for beneficiaries, and the GAO found that some states are significantly further along in rebalancing their provision of LTSS, and therefore may have less need to utilize the new options provided under PPACA. GAO pointed out that other states have further to go in determining whether and how to incorporate any of the four new options into their existing programs and have many factors to weigh, including their state budgets and the coverage and flexibility the options provide to reach their rebalancing goals.

Of the four options discussed by the GAO, two were created as part of PPACA. Three of the options provide states with financial incentives in the form of enhancements to the Medicaid matching rate that determines the federal share of the program’s costs.

According to the GAO, as of April 2012, 13 states had applied for and received $621 million for Money Follows the Person grants, which were and were in various stages of implementation. This is in addition to the 30 states and theDistrict of Columbiathat had received grants prior to PPACA. GAO also noted that states were beginning to apply for the other three options. One state had applied for Community First Choice. Two states had received approval to participate in the Balancing Incentive Program, and CMS was in the process of reviewing two additional state applications. Three states had received approval to offer the revised1915(i) state plan option since PPACA’s enactment.

GAO contacted 10 states as it investigated these programs. The states reported considering several factors in deciding whether to pursue the PPACA options, including potential effects on state budgets, staff availability, and interaction with existing state Medicaid efforts. GAO found that states were “attracted by the increased federal funding available under some of the options, but were concerned about their ability to contribute their share of funding. Limited staff resources and competing priorities were also concerns.” GAO also noted that broader Medicaid reform efforts, such as transitions to statewide managed care, and the potential interaction with existing HCBS options were considerations that states were weighing. HHS and CMS have initiatives under way to assist states with their HCBS efforts, and GAO believes that “the complexities of the Medicaid HCBS options available and the changing factors affecting States’ planning underscore the importance of ongoing federal technical assistance to help states navigate various HCBS options as they seek to ensure appropriate availability of HCBS.”